Bangladesh bourse scam blamed on businessman

gulfnews : Bangladesh bourse scam blamed on businessman

Dhaka: Major stakeholders have pointed their fingers at an influential businessman for Bangladesh's stock market debacle last week as the government ordered a probe into the alleged bourse manipulation alongside the bailout measures.

"All fingers pointed at one businessman," read the headline of a Daily Star report as it said the leading businessman came under fire at a stormy meeting between Finance Minister A.M.A. Muhith and major stakeholders.

It said several high-profile individuals told the meeting that the businessman, who was also present, "is very close to the ruling (Awami League) party" and the same businessman was also linked to the 1996 share market scam but remained "scot-free due to what the government said was lack of evidence".

The report came as investors and analysts earlier said at least 11 people were very active in manipulating the market who were earlier referred to as "those 11".

Bangladesh's stock market was closed on Sunday and remained closed yesterday after a crash that caused fund losses of millions of small investors as the benchmark Dhaka Stock Exchange general index fell nearly 1,800 points between December and January.

The report, however, did not name the businessman but he reportedly told the meeting, "I feel insulted and am a successful businessman" as he was castigated by the stakeholders for masterminding the debacle for his own benefit.

Probe



Emerging from the four-hour meeting, Muhith announced that a high-powered committee would be constituted in the next 15 days to investigate the alleged manipulation with directives to submit reports in 30 days.

He also announced a series of bailout measures under which the merchant banks were asked to reinvest their profits generated from the volatile share market in a bid to bring back normalcy to the market.

The minister also announced that under the rescue campaign, the recently introduced circuit breaker system would be lifted, the current book-building method would be suspended, companies would be allowed to buy back their shares and Bangladesh Bank is to remain "soft" on banks' exposure to stocks.

Muhith, who earlier admitted "wrong handling" of the stock market situation by him as well as the regulatory Securities and Exchange Commission (SEC), said the market was not "free of risk yet" but "we now have a tremendous ability to observe the market (and so) it is very much possible to stabilise the market".

"Trading will resume on Tuesday ... the overall price-earning ratio in the market is 23:1 and the index now stands at around 6,300 points. I do not think it is too high. The market fundamentals are good," he said.

The minister, however, urged the investors to be a littler more cautious in the future, saying, "It is not likely that an investment of 10 taka [Dh0.52] would yield a profit of 50 taka overnight".

But several business analysts said the bailout measures were "not adequate" unless stern measures were taken against the "manipulation culprits" and the reconstitution of the SEC.

"These influential culprits can do and undo many things, they can even murder people for their interests ... on the other hand unless the regulatory body is reconstituted with appointment of competent people," former central bank deputy governor Ebrahim Khalid told a television talk show Sunday night.

Punitive action

Former Bangladesh Bank governor Salehuddin Ahmad also suggested "immediate" punitive actions against the stock market manipulators saying, "Now shares are being traded through an automated system and so the culprits could be detected easily."

The finance minister earlier also alleged that the "big fishes" now went into hibernation drawing millions of taka manipulating the market exposing small investors to misery.

But he said the cases filed after the 1996 stock market scam could not be continued as no witness was found.

"Next time [this time], we will not require any witness. The records at the central depository of Bangladesh will be the witness," he told the briefing yesterday.